Responsible Investment

Global uncertainties denting the carbon market

April 13, 2012

Rutger de Witt Wijnen

http://www.youtube.com/watch?v=oaXscH6rigM

The global economic crisis led to a virtual ‘perfect storm’ in which follow-on effects (fewer emissions, consequently too many allowances and a lowered price) really damaged not just the market, but the reason for the market. “Companies didn’t have the incentive to reduce their emissions which is what it is all about in the first place,” he says.

The vulnerability of the current market has much to do with uncertainties such as the US presidential elections and new global carbon regulations expected in 2015. But 2015 is far away, and the results of United Nations FCCC negotiations far from certain. “It is the assumption and hope that something will happen, but … it depends upon the negotiations of those 194 countries within the U.N. FCCCand it is yet to be seen if they will meet their deadlines,” he says. “Because of China’s know how in the market, they will play a big part in any new international agreement,” he says.

One of the unfortunate aspects about the depressed CO2 market is the loss of expertise that follows the exit of market players. “People and companies are leaving the markets; companies are closing their carbon trading desks, the same for law firms and advisors.I’m a lawyer myself, and there is a decline in the number of lawyers involved in this topic. It’s a pity,” he says, “because you’re losing the infrastructure:people who have the know-how of how environmental markets work… something we’ve built up together in the past ten years.”

References

This video interview was recorded in Amsterdam on March 6, 2012 during the Argus European Emissions Markets 2012 organized by Argus Media.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Global uncertainties denting the carbon market”, Rutger de Witt Wijnen, www.tias.edu, April 13, 2012.

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